But intense price competition online, mainly from Amazon, as well as cheaper store-brand products have weighed on profits in the U.S. and other Western markets.

U.S.-based P&G derived 12 percent of group sales, or $7.5 billion, from health care products last year, including Oral-B toothbrushes and toothpastes.

The purchase price for Merck’s business suggests that the German company climbed down from price demands of as much as 4 billion euros, which sources told Reuters had deterred initial suitors such as Nestle, Perrigo and Stada owners Bain and Cinven.

Morgan Stanley analyst Vincent Meunier said the price still implied a valuation of 4.7 times sales and around 19 times operating profit (EBITDA) for the business, at the high end of recent deals in the sector.

“This will help (Merck) focus on its pharma unit and refurbish its pipeline,” he said.

Merck shares were up 0.5 percent higher at 0833 GMT, among top gainers in the German blue-chip DAX index, having risen 1.2 percent earlier.

FILE PHOTO: A display of Pampers diapers are seen on sale in Denver, Colorado February 16, 2017. REUTERS/Rick Wilking/File Photo

Merck said that it fetched a multiple of about 19.5, above recent industry transactions and based on an adjusted “economically transferred” EBITDA of 173 million euros in 2017.

The proceeds would allow it to reduce debt faster, giving its businesses, which include chemicals, pharmaceuticals and lab equipment, more flexibility, although it ruled out acquisitions worth more than 500 million euros this year. P&G also announced it will split up its consumer care joint venture with Teva, PGT Healthcare, on July 1, saying strategies were no longer aligned.

PGT accounts for nearly all of P&G’s personal health care sales outside of the United States.

Teva said the terms of the agreement to terminate the JV with P&G would not be disclosed and that the dissolution was amicable.

Merck said the divestment of its consumer health business did not change its goal of keeping net sales of its established prescription drugs, such as Erbitux against cancer and multiple sclerosis treatment Rebif, organically stable until 2022.

It will issue guidance for 2018 to reflect the sale of the consumer healthcare business with it publishes first-quarter financial results on May 15, it said.

INDIA BUSINESS

About 3,300 Merck employees could move to P&G upon completion of the transaction, which is expected by the fourth quarter.

As part of the deal, P&G will buy a majority stake in the German company’s Indian consumer health business, Merck Ltd, and subsequently make a mandatory tender offer to minority shareholders.

A final agreement with P&G on Merck’s French consumer health business has yet to be worked out with labor representatives but that will not change the overall price agreed with P&G.

FILE PHOTO - The logo of Dow Jones Industrial Average stock market index listed company Procter & Gamble (PG) is seen on a tube of toothpaste in Los Angeles, California, United States, April 25, 2016. REUTERS/Lucy Nicholson

JP Morgan acted as financial adviser to Merck on the transaction, and Freshfields Bruckhaus Deringer was legal adviser.